On 1 June 2021, ABC Ltd entered into a non-cancellable purchase commitment with a supplier, to purchase an inventory of cardboard boxes for US$100,000 on 1 August. The purchase is on credit which is payable on 1 Sept 2021. The CFO was concerned about the impact of the adverse exchange rate movements. ABC Ltd entered into a forward rate agreement with the Commonwealth Bank on 1 June 2021 to purchase US$100,000 on 1 Sept 2021. ABC Ltds reporting date is 30 June. The following exchange rates are applicable:

2021 Spot rate Forward rate for delivery of $100,000 on 1 Sept

1 June A$1.00=US$0.82 A$1.00=US$0.78

30 June A$1.00=US$0.80 A$1.00=US$0.75

1 August A$1.00=US$0.82 A$1.00=US$0.79

1 Sept A$1.00=US$0.85 A$1.00=US$0.85

ABC Company has designed the hedging arrangement as a cash flow hedge, which qualifies for hedge accounting in accordance with AASB 9 Financial Instruments. The hedge is highly effective.

REQUIRED:

Prepare the general journal entries to record these transactions at various dates in ABC Ltds books in accordance with the requirements of AASB 9 Financial Instruments.

Show all calculations on measuring fair values and changes in fair values of the hedging instrument and the hedged item at various dates. No narration is required